The following book and fair values were available for Westmont Company as of March 1. Book Value
Question:
The following book and fair values were available for Westmont Company as of March 1.
Book Value | Fair Value | |||||
Inventory | $ | 538,750 | $ | 499,250 | ||
Land | 768,750 | 1,011,750 | ||||
Buildings | 1,835,000 | 2,177,750 | ||||
Customer relationships | 0 | 843,000 | ||||
Accounts payable | (97,500 | ) | (97,500 | ) | ||
Common stock | (2,000,000 | ) | ||||
Additional paid-in capital | (500,000 | ) | ||||
Retained earnings 1/1 | (405,000 | ) | ||||
Revenues | (445,000 | ) | ||||
Expenses | 305,000 | |||||
Arturo Company pays $4,030,000 cash and issues 25,400 shares of its $2 par value common stock (fair value of $50 per share) for all of Westmont’s common stock in a merger, after which Westmont will cease to exist as a separate entity. Stock issue costs amount to $31,600 and Arturo pays $49,700 for legal fees to complete the transaction. |
Prepare Arturo’s journal entry to record its acquisition of Westmont. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) |
2) Record the legal fees related to the combination. 3) Record the payment of stock issuance costs. |
Advanced Accounting
ISBN: 978-0134472140
13th edition
Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith